The Real Deal New York

Swig faces another suit on alleged loan default

October 05, 2009 06:44PM
By David Jones

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Embattled developer Kent Swig is facing another lawsuit on an alleged loan default, as RCG Debt IV Non-REIT Asset Holdings filed for a $3.5 million judgment Sept. 23.

According to the suit filed in New York State Supreme Court, Swig, on Jan. 8, 2008, delivered a promissory note to RCG that was due Dec. 31, 2008. At the end of 2008, Swig was granted an extension until Feb. 28, 2009, and on July 24, 2009, he made two $50,000 interest payments for a total of $100,000, court documents show.

Under the terms of the loan, Swig accumulated interest at 15 percent for the month of February, and 24 percent since March 1, minus the $100,000 payment. The judgment was signed Sept. 21, 2009, for $3.9 million.

The judgment was entered at a time when Swig is appealing a $32.4 million judgment by Square Mile Structured Debt, which filed suit after Swig defaulted on $28 million in loans related to the conversion of his former condominium project Sheffield57, at 322 West 57th Street.

Swig is fighting to have his salary released from Terra Holdings, the brokerage firm where he is co-chairman and co-owner. Square Mile has sent information subpoenas to collect information on Swig’s income. However, the developer has warned that he would file for bankruptcy protection if Square Mile followed through on attempts to collect the debt.

Swig is facing a separate lawsuit by RBS Citizens N.A., which is seeking a $1.5 million judgment against Swig for a letter of credit issued to 450 Sansome, a limited liability firm controlled by Swig.

Swig, part of a prominent San Francisco real estate family, acquired a 140,000 square foot office building at 450 Sansome Street there for $28 million in 2005.

Swig signed the guarantee for the letter of credit in August 2007, according to the lawsuit. Swig received demand letters for the guarantee on Aug. 21 and Sept. 8, 2009, but failed to respond to the requests, according to the lawsuit, also filed in New York State Supreme Court.

Neither Swig, nor his attorney, Y. David Scharf, was immediately available for comment.

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